Key Takeaways
- Meta shares plummeted over 10% following first-quarter 2026 results, erasing approximately $175 billion in market value
- Quarterly revenue reached $56.31 billion, representing 33% year-over-year expansion — the best performance since 2021
- Capital expenditure forecast for 2026 increased to a range of $125–$145 billion, up from the prior $115–$135 billion estimate
- JPMorgan analyst Doug Anmuth shifted his stance to Neutral from Overweight, reducing the price objective to $725 from $825
- Family daily active people totaled 3.56 billion, falling short of the Street’s 3.62 billion projection
Meta Platforms delivered what appeared to be an impressive quarterly performance on April 29, 2026, yet investors sent shares down more than 10% in the following session. META traded near $610 at the time of this writing, retreating from above $700 prior to the earnings announcement.
The social media giant posted $56.31 billion in quarterly revenue, marking a 33% year-over-year increase. This growth rate represents the company’s most robust quarterly expansion since 2021. Net income totaled $26.8 billion, translating to $10.44 per diluted share, though this figure incorporated an $8.03 billion one-time tax benefit related to U.S. Treasury R&D regulations.
Excluding that tax windfall, the profitability metrics remain strong — just not as spectacular as the headline suggests.
Ad impressions climbed 19% compared to the same period last year. The company revealed that over 4 million advertisers now utilize at least one of Meta’s generative AI creative tools. The family daily active people metric hit 3.56 billion, falling below analysts’ consensus estimate of 3.62 billion.
Meta’s management attributed the user shortfall to internet service disruptions in Iran and regulatory restrictions on WhatsApp usage in Russia.
JPMorgan Abandons Bullish Stance
The catalyst that shook investor confidence wasn’t the user engagement miss — it was JPMorgan’s dramatic shift.
Doug Anmuth, the JPMorgan analyst who had been among Meta’s most vocal advocates on Wall Street, downgraded the stock to Neutral from Overweight and slashed his price target to $725 from $825 on April 30.
The primary driver was Meta’s revised capital spending outlook. The company elevated its full-year capex projection to $125–$145 billion, up from the previous $115–$135 billion range. This marks the second straight upward adjustment. Meta’s initial 2026 capex guidance, announced in January, stood at $115–$135 billion.
First-quarter capital expenditures alone totaled $19.8 billion, representing a 47% year-over-year surge. CFO Susan Li cited elevated memory-chip costs and expanded data center investments as primary factors.
Anmuth’s apprehension isn’t centered on the spending magnitude itself. His concern lies with the anticipated return on investment. “We believe full-stack AI competition is intensifying and Meta has a more challenging path to returns on heavy AI capex beyond advertising,” he stated in his research note.
He forecasts Meta’s capital expenditures will balloon to $202 billion in 2027, producing negative free cash flow of $4 billion in 2026 and $24 billion in 2027.
Capital Allocation Strategy
Meta’s artificial intelligence initiative focuses on proprietary large language models, data center expansion, and the recently unveiled Muse Spark model — the inaugural release from its superintelligence research division.
Daily active users of Meta AI glasses surged threefold year-over-year during the first quarter. Reality Labs recorded an operating loss of $4.03 billion for the period.
Anmuth recognized Muse Spark as “the first step towards Meta’s goal of pushing the frontier and delivering personal superintelligence to billions of users,” but emphasized that the pathway from these investments to non-advertising revenue streams remains ambiguous.
The majority of other Wall Street analysts declined to follow JPMorgan’s downgrade. Barclays, Cantor Fitzgerald, and TD Cowen all reduced their price objectives while preserving bullish ratings.
Anmuth also identified two immediate challenges for the second quarter: more difficult year-over-year revenue comparisons and the implementation of European Limited Privacy Advertisements, which is anticipated to create revenue headwinds beginning in Q2.
JPMorgan’s revised $725 price target suggests approximately 8% potential upside from present trading levels.
